Silicon Valley's Tax-Avoiding, Job-Killing, Soul-Sucking Machine - "Four companies dominate our daily lives unlike any other in human history: Amazon, Apple, Facebook, and Google. We love our nifty phones and just-a-click-away services, but these behemoths enjoy unfettered economic domination and hoard riches on a scale not seen since the monopolies of the gilded age. The only logical conclusion? We must bust up big tech."

Network externalities, economies of scale, economics of scope (because of data) and addictiveness all make Big Tech a huge economic problem. They are independent, and serious, reasons why the dominance of a few companies in a range of internet-based services should be seen as economically dysfunctional — against the frequent claim that the availability of good products at low or zero prices means there is no problem.

Above all, the classic consequence of insufficient competition: the extraction of “economic rent” — profits over and above what is necessary to encourage the product or service to be provided in the first place. Economic rent is the main reason why the internet giants are so wildly valuable — because they either enjoy profits beyond any proportion to their cost or are expected by investors to do so in the foreseeable future... But there are particular features of the digital economy that exacerbate its noxious effects... FirFirst, the intangible nature of internet services makes it particularly easy for them to avoid taxation through jurisdiction-hopping..st, the intangible nature of internet services makes it particularly easy for them to avoid taxation through jurisdiction-hopping... Second, the unprecedented data-gathering that goes hand in hand with the provision of online services... Put all these phenomena together, and you get a tendency towards exacerbating a shift in incomes from labour to capital, and a more intense inequality of labour incomes. Both are at the heart of the economic changes that have produced populist insurgencies in many rich countries since the 1980s.

What all these efforts have in common is that they involve updating the notion of taxable presence, and of the location of value-creating economic activity, to fit 21st century reality. Achieving this is largely a question of political will... it is perfectly possible to do a proper job of taxing the digital economy [and] this can be done in the context of fixing the taxation of multinational corporate activity generally.

[T]he most obvious public policy for addressing the rent extraction built into the nature of the internet: tax the rent away to use the resources for the common good. But this, while the most obvious, is a limited solution, insofar as it does not remove the rent extraction itself; it just redistributes it according to public preferences... to refashion those markets’ incentives so as to mimic what a more normal, well-regulated and competitive economy would produce... A radical, but time-honoured, form of structural regulation is to force the break-up of companies [but if] scale is what allows Amazon to be as good as it is, two Amazons may perform worse, also for consumers...
There is an alternative approach: direct public provision. Many online services, most obviously matching platforms such as Uber, or universal social networks (those used by everyone rather than special communities), have clear public utility characteristics. So why not provide such services publicly? In other words, where governments see that private actors have identified a need for a digital marketplace (or even invented it), they should consider taking responsibility for providing the marketplace themselves. That’s because it is precisely when economic activity centres itself around a single platform that the market failures which we discussed on Monday — forces encouraging excessive market power — appear...
Furthermore, authorities can require online service providers to plug into related public services such as tax collection. The Estonian government, an exciting pioneer in using the internet for public services, has created an environment for taxi and ride-sharing apps that is not only friendly to competitors of Uber (such as homegrown Taxify) but digitally integrates automatic tax collection from the industry.

The clear principle is the idea that internet users — the consumers of services such as Google’s search and Facebook’s social network, and much else besides — are the authors of their own activity whose rights to the information they create deserves legal protection. One implication is that they must have robust privacy protection and rights to stop certain uses or even collection of data about them. A more ambitious, but equally logical, implication is that the data are, or ought to be, the property of the users who generate them. Taking this idea seriously points to a very clear role for governments: defining and protecting property rights in data...
The promise here is not just what we may call “creative control” — users can stop untoward accumulation of data about them — but also commercial control. If user data are user property, users can be offered, and may choose to accept, being paid for their use (for example for advertising). Internet consumers could even develop a collective class consciousness as the data workers they really are. This would transform the distribution of market power on the internet, countering the nefarious forces that make rent extraction so easy, even if the market structure remains recognisably the same.
I said there was a second principle at work. This is the intuition that online service providers are not just “dumb plumbing” connecting users with one another. Their algorithms, while (by definition) mechanical rules, are designed to achieve certain types of connections. But their full effects may be much broader than the narrow goals intended by their makers, and can often be harmful. That can include discrimination, misinformation, and encouraging users to adapt their behaviour to suit the algorithms. What the algorithms are has consequences; if internet companies designed them differently, the consequences would differ too. The inescapable conclusion is that, as a general approach, online service providers should not escape responsibility for what their algorithms have wrought.
What concrete behavioural regulations this involves is, of course, impossible to establish in general. But it does suggests holding algorithmic activity to the same standards as the old-fashioned way of doing things: editorial responsibility for what content an algorithm pushes into or out of public exposure; legal liability for discrimination in service provision on a comparable basis as human choices to discriminate would be viable; a possible finding of complicity in wrongdoing encouraged or facilitated through the algorithms of an online service.

Someone is wrong on the internet: More on gender and "status" in the US - "American women's lives have not actually improved relative to men's in the past two decades... There has been a sharp increase in female mortality rates from alcoholic liver disease, overdoses and suicides since 1999. The death rates attributed to 'deaths of despair' for US women aged 25 to 64 have climbed more quickly than comparable mortality rates for US men during that time. On top of that, maternal death rates have climbed sharply, with increases across categories of race and age."

Middle America Reboots Democracy - "[M]others and grandmothers ranging in age from their 30s to 70s, are fueling an American political transformation that most media outlets are systematically missing, or at least misreading."

Thoughts on the Medicare Extra Proposal - "Sanders, National Nurses United, and other single-payer advocates managed to get most of the conceivable 2020 Democratic nominees for president to sign on to the single-payer idea and, lo and behold, CAP now has a single-payerish plan that scraps the core insurance elements of the Affordable Care Act."

The 28-Hour Work Week - "A couple of weeks ago the biggest labor union in Germany negotiated a big new deal with hundreds of German companies. Workers didn't just get a raise, they also won the option of working just 28 hours a week for up to two years without losing ground in their careers."

Only the US has found a lasting way to make well-off employees work all hours into old age: take away their healthcare insurance if they stop. Yet even there, things may change. Amazon is piloting technical teams that work 30-hour weeks for the same benefits and three-quarters the pay of 40-hour employees. Such schemes will become common if the economy keeps growing.

I have a serious question, looking at teh first half of links in the OP. Back in 1999 or 2000, had we in anyway been able to predict this outcome from the "webz" as they were then, full of hope for the future of a more internetworked humanity lowering barriers to connections around the globe, or did this happen due to some key inflection point that we are now able to identify in hindsight?

tl;dr - did something happen to make trigger the direction of the internet's development into this narrow tunnel of a handful of major players?posted by infini at 3:23 AM on March 1, 2018 [1 favorite]

"Haha whoops, an unhealthy obsession with one or two metrics of prosperity without regard for outcome or externalities somehow turned the economy into a wasteland ravaged by hypertrophic monsters who feed on human flesh, just like in that one cartoon show my cousin wouldn't stop posting about in 2014. Maybe I should have paid more attention at the time! I'm going to rate this situation as Possibly Bad, But Not My Fault."posted by Iridic at 3:27 AM on March 1, 2018 [16 favorites]

tl;dr - did something happen to make trigger the direction of the internet's development into this narrow tunnel of a handful of major players?

Probably the internet crash of 1999. Without the support of today's venture capitalists (and the internet didn't really have any 'track record' at that point, so many pulled out), many competing/overlapping websites just failed...even, ultimately AOL and Yahoo, the giants of the day.posted by sexyrobot at 3:58 AM on March 1, 2018 [5 favorites]

infini: did something happen to make trigger the direction of the internet's development into this narrow tunnel of a handful of major players?

The assumption for as long as I've been paying attention is that network effects make concentration inevitable in the online world. If you're not the biggest, then you'll end up as nothing.

The dynamic is similar in most industries. If you're a consumer, why choose the second-best product if the price is the same? Some people will choose the second-best product if the price is lower, and the third-best product if the price is lower yet, but by the time you get to the fourth- or fifth-best product consumers won't buy it unless the price is lower than the cost of production so those producers go out of business.

The biggest thing that saves an industry from consolidation is high transportation costs. They give a local producer an advantage, even if a distant producer makes a better product. On the Internet, transportation costs are low, and local producers have no advantage over distant ones.posted by clawsoon at 4:18 AM on March 1, 2018 [33 favorites]

On Wednesday, it announced that now that the US government has sufficiently capitulated on corporate tax rates, it will pay a fraction of the taxes it previously would have owed.
...
If Apple had paid the previous tax rate of 35 percent, its bill would have come out to around $88 billion. Now, that money can go into making the company even larger and providing more cash to hold overseas until Uncle Sam cries uncle again.

And unless I'm mistaken, that just pertains to overseas holdings, not the Braeburn dodge which affects Federal and state revenue.posted by snuffleupagus at 4:53 AM on March 1, 2018 [1 favorite]

No idea what glitch in my neuro-optical processing produced this, but I read "chokehold" in that headline as "choadload." And then wondered just what Bloomberg would consider a choadload.posted by adamgreenfield at 5:10 AM on March 1, 2018 [4 favorites]

I wouldn't put it that way.

Well that's why the billions were stashed overseas in the first place. The new tax code is what the US companies were all waiting for. New tax code, bring billions back, buyback the stock, inflate the stock price, CEOs collect squillions in bonuses on their contracts. It's just a smash and grab for anything that's not nailed down at this point.posted by Talez at 5:10 AM on March 1, 2018 [15 favorites]

kliuless is one of my favorite posters. Each post is a wealth of good stuff. The downside is, I've got a busy day at work and can't read it all right now. I'll Pocket it, of course, but I'm impatient! Thanks for posting.posted by kevinbelt at 7:48 AM on March 1, 2018 [6 favorites]

Amazon is piloting technical teams that work 30-hour weeks for the same benefits and three-quarters the pay of 40-hour employees. Such schemes will become common if the economy keeps growing.

I suppose. Though, I suspect the Amazon techs are probably far better-paid and can more easily absorb a cut to 3/4 pay (with full benefits, to boot) than can most other non-tech-sector workers in the US. I have a hard time imagining most employers adopting a cut-hours-with-full-benefits scheme. Cut hours? Sure!! With full benefits? HAHAHAHAHA!!!

Add to that the real situation that increasing numbers of hourly workers have, where they are already given barely enough hours weekly to even qualify as full-time, if that, with barely any benefits, if any. That, I'm afraid, is the real future for US workers.posted by Thorzdad at 7:52 AM on March 1, 2018 [1 favorite]

Something something mass direct action something. Most economic models these days are based on by the skin of your teeth just in time delivery. Stop work at a fulfillment center for like an hour and yuncoukd create the most massive backlog.posted by The Whelk at 8:30 AM on March 1, 2018 [7 favorites]

Amazon needs to be broken up, full stop. They are too big and have too much power and people are literally giving them the keys to their front door. And now they're privatizing health care for the benefit of their employees. People are prostrating themselves before the altar of convenience.posted by grumpybear69 at 8:37 AM on March 1, 2018 [8 favorites]

tl;dr - did something happen to make trigger the direction of the internet's development into this narrow tunnel of a handful of major players?

Think of it as evolution in action. An entity finds a marginally better way to exploit the environment than its neighbors and grows. Growing, it becomes even better at exploiting the environment, including swallowing some of it neighbors that grew into competitors. Continue until the environment is exhausted.

Barring outside intervention (ie, government regulation), this was inevitable.posted by SPrintF at 8:50 AM on March 1, 2018 [1 favorite]

I've worked at Amzn. The 30 hour week is designed to make it really easy to fire people who do not generate the output of the 40 hour workers. Their entire system is built around lowering labor costs by squeezing workers and then replacing them.

And I find it hilarious that the "Vampire Squid" is complaining that it can control these tech companies, calls for government enforcement of the financial industries right to rule the world, and that people are buying it.

Bring back unions and then antitrust our bankster friends. Anything else is a con.posted by pdoege at 8:53 AM on March 1, 2018 [17 favorites]

All corporations and banks are corrupting by the nature of their size. They need to be broken up.

But this doesn't require years of government lawsuits as for the Bell telephone system. It can be accomplished by increasing tax rates as companies increase in size, doubling and re-doubling their taxes rates as necessary. Large corporations will break up themselves voluntarily and others will avoid ever becoming that large by selling off pieces as they grow.posted by JackFlash at 8:59 AM on March 1, 2018 [2 favorites]

Barring outside intervention (ie, government regulation), this was inevitable.

I feel,like people don’t actually read Adam Smith cause this was his whole deal, if left to their own devices, companies will create monopologies and conspiracies against the public.posted by The Whelk at 9:04 AM on March 1, 2018 [8 favorites]

On inequality:

Last year the wealth of the world's billionaires - 2043 of them in total - rose by $762 billion according to Oxfam. That alone is enough to end extreme poverty worldwide SEVEN times over. Extreme poverty has been defined by Oxfam as making less than $1.90 per day.

The richest THREE people in the USA are worth more than HALF the US population.

The richest 42 people in the world are worth more than HALF the WORLD'S population.

The richest 1% in the world are worth more than the ENTIRE rest of humanity.

Sources: Oxfam, Credit Suisse

On competition:

The Economist, on competition in the USA: An American firm that was very profitable in 2003 (one with post-tax returns on capital of 15-25%, excluding goodwill) had an 83% chance of still being very profitable in 2013; the same was true for firms with returns of over 25%, according to McKinsey, a consulting firm. In the previous decade the odds were about 50%. The obvious conclusion is that the American economy is too cosy for incumbents.

I think the combination of network effects along with massive economies of scale due to technology, among countless other things, is severely dampening competition in tech, healthcare, and other growth industries.

On tax avoidance and Apple:

For those interested more about tax avoidance, Apple's Senate hearing on tax avoidance is a classic. Here is how they get away with highway robbery.

"Apple Inc. has created three offshore corporations, entities that receive tens of billions of dollars in income, but which have no tax residence—not in Ireland, where they are incorporated, and not in the United States, where the Apple executives who run them are located. Apple has arranged matters so that it can claim that these ghost companies, for tax purposes, exist nowhere. One has paid no corporate income tax to any nation for the last 5 years; another pays tax to Ireland equivalent to a tiny fraction of 1 percent of its total income."

Broadly, the US taxes corporations based on where they are incorporated. Ireland taxes corporations based on where they are managed and controlled. So, if you incorporate in Ireland but manage and control from California...voila! You're a company without a nation for tax purposes. Now you can funnel sales through that ghost subsidiary...that's how Apple could push 1/3 of its sales through an Irish subsidiary which paid no corporate income taxes for years on end.

"Under Irish law, only companies that are managed and controlled in Ireland are considered Irish residents for tax purposes. Apple says that although AOI is incorporated in Ireland, the company is not managed and controlled in Ireland and, therefore, is not a tax resident in Ireland. U.S. tax law, on the other hand, generally turns on where a company is incorporated, not on where it is managed and controlled. Apple says that since AOI is not incorporated in the United States, it is also not present in the United States for tax purposes. Magically, it is neither here nor there"posted by hexaflexagon at 9:10 AM on March 1, 2018 [8 favorites]

via @sjwrenlewis, a tweetstorm by Marshall Steinbaum. "It's been obvious for the entire time I've been a professional economist that the core explanation for recent economic outcomes is inequality of power, especially between employers and employees... the utter absence of this crucial mechanism for explaining economic reality from the mainstream of the field of economics has always struck me as glaring.

"... It's highly gratifying to feel like I've been stomping my feet & waving my arms about labor monopsony and people are finally taking notice."posted by sourcejedi at 9:19 AM on March 1, 2018 [6 favorites]

On tax avoidance and Apple

I like economist Dean Baker's solution to corporate tax avoidance. Tax corporations as if the government owned a non-voting 20% share of the company. If the company pays a dividend, 20% goes to the government. If the company does a share buyback, 20% of that buyback goes to the government.

The only reason to avoid taxes is to take more from the government's share of earnings and give a bigger share to the shareholders. If the government is treated equally as a shareholder, there is nothing to avoid.

Corporations would find this to their benefit because they would no longer have to spend billions of dollars a year on tax avoidance schemes, tax lawyers and accountants. They wouldn't even have to file a tax return.posted by JackFlash at 9:35 AM on March 1, 2018 [11 favorites]

I feel that this post conflates two things: one, the relatively novel discovery/admission by labour economists that there is a monopsony situation that's keeping wages down, broadly across many sectors of the economy. And two, that tech companies are really big and borderline monopolies.

infini: did something happen to make trigger the direction of the internet's development into this narrow tunnel of a handful of major players?

The assumption for as long as I've been paying attention is that network effects make concentration inevitable in the online world. If you're not the biggest, then you'll end up as nothing.

That's basically it - online companies have direct access to consumers broadly without any geographical limits or middlemen restricting them. Positive feedback makes the big players get bigger over time.

Anyway, I think it's important to realize that even in areas far away from tech wages are stagnant because of increasing concentration in all sectors of the economy. I hope that recent pushes in many regions to increase minimum wage help offset this effect but ultimately more competition amongst employers for workers would be better.

All corporations and banks are corrupting by the nature of their size. They need to be broken up.

But breaking up huge businesses that are really just single businesses seems impractical to impossible - Amazon's retail division by itself is still a huge business that singlehandedly tilts the entire retail landscape. You can't break it up regionally like the Bell breakup. Are you going to break it up by types of goods? Amazon-Electronics.com vs Amazon-PetFood.com? Throwing away AWS and hardware devices is irrelevant to the dominance of their retail business.posted by GuyZero at 10:02 AM on March 1, 2018 [1 favorite]

But breaking up huge businesses that are really just single businesses seems impractical to impossible

You simply lack imagination. As I proposed, tax them by size -- a lot -- and Amazon will magically find a way to break itself up.posted by JackFlash at 10:23 AM on March 1, 2018

As I proposed, tax them by size -- a lot -- and Amazon will magically find a way to break itself up.

To me, breaking up oversize companies, while a noble goal, is like playing whack-a-mole. As is stated above, the evidence seems to show that monopoly is not only the goal but the natural end of a successful company. Whichever company comes to dominate a new field of technology will continue to dominate it as we have seen with railroads, oil, appliances, the telephone system, internet, telecom, online retail, etc.

It seems to me that a surer and more lasting approach would be to target the underlying issues these big monopolies can cause... some things that come to mind are fixing labor relations, closing the tax loopholes, detaching benefits from jobs themselves.

I think bringing in the hammer and swinging it at the monopolies gets more attention because even conservative voters and libertarians can support doing so (everybody hates Amazon). In comparison fixing the underlying reasons why we all hate Amazon has the optics of a liberal pipe dream.posted by hexaflexagon at 11:07 AM on March 1, 2018 [3 favorites]

I’m always fascinated by people who say that the tech giants should be “nationalized”. What would that even mean? Generally the kind of business that can be successfully nationalized are the ones with serious physical assets - railroads, mining concerns, etc, that the government can take control of. Now maybe in Amazon’s case you’d take the distribution and warehouse infrastructure, but what would nationalizing Facebook look like? All Facebook has is data centers (which are by and large a commodity, not the key to the business), employees (who will just leave if they don’t like the direction your nationalization takes the company) and software (which is useless without the employees).posted by Itaxpica at 11:44 AM on March 1, 2018 [1 favorite]

"breaking up oversize companies, while a noble goal, is like playing whack-a-mole"

You can make that argument about literally anything, though. E.g., protesting last summer's Charlottesville rally won't help, because Nazis will just rally in another city. Demanding bans on assault rifles will fail because school shooters will use other weapons. Just because it won't definitively solve a problem doesn't mean that it can't help. Almost all regulation is whack-a-mole, but I'd rather whack one mole at a time than have all the moles on the board up at once.posted by kevinbelt at 12:31 PM on March 1, 2018 [14 favorites]

Preventing power from being concentrated into few hands has always and will always be whack-a-mole. It's the most important game we play, and we can never stop.posted by clawsoon at 1:44 PM on March 1, 2018 [21 favorites]

Bring back unions and then antitrust our bankster friends. Anything else is a con.

Unfortunately, SCOTUS is poised to deliver a death blow (or something close) to unions this term.posted by Thorzdad at 1:54 PM on March 1, 2018 [1 favorite]

what would nationalizing Facebook look like?

The U.S. government would own 100% of its stock. I'm not sure why you find this so puzzling--the U.S. effectively nationalized Fannie and Freddie, whose assets are overwhelmingly intangible, in the last crisis and it wasn't structurally too hard to understand.

employees (who will just leave if they don’t like the direction your nationalization takes the company)

Since they've pretty much been knuckling under to their bosses for years, what makes you think they would leave? If you're referring to the top brass, those guys are a LOT more dispensable than they want the world to think.posted by praemunire at 2:16 PM on March 1, 2018 [5 favorites]

Don't just bash Apple here. They happen to hold one of the larger bags of money here, but there's countless smaller (yet still quite large) companies using the same tricks. Sometimes I worry if the only way to fix this is have a world government and world tax rate, which immediately makes me worry if that cure is even worse than the disease. Given how good people are at finding loopholes and at abusing things, I fear the answer is "yes, it is". I have no answers...posted by DreamerFi at 2:55 PM on March 1, 2018 [1 favorite]

Amazon needs to be broken up, full stop. They are too big and have too much power and people are literally giving them the keys to their front door. And now they're privatizing health care for the benefit of their employees. People are prostrating themselves before the altar of convenience.

This is all pretty absurd. Why on earth would anyone other than the true believers that frequent Metafilter ever think it would be a good use of government power to break up a store that sells a staggering array of goods for very reasonable prices with remarkable speed and convenience? Because people are willing to give them the keys to their house? Privatizing health care for its employees? I would say it's about time. That being said, it's far from clear what they are thinking of doing. The question would be, why is this a bad thing? It's not like this had never been done before. Plenty of people reading this thread have health care as a result of industrialist Henry J. Kaiser doing this very thing back in the 1940s, creating a health care system for his employees.

If you want to prostrate yourself before the altar of fewer goods, higher prices, more inconvenience, have at it. Good luck attracting a following.posted by 2N2222 at 5:40 PM on March 1, 2018 [1 favorite]

Why on earth would anyone other than the true believers that frequent Metafilter ever think it would be a good use of government power to break up a store that sells a staggering array of goods for very reasonable prices with remarkable speed and convenience?

There are a number of possible reasons, but I'm going to go today with having the basic capacity to work out what happens once Amazon's good-dumping wipes out the rest of the mass-retail infrastructure in this country and they are free to price their goods as they please. I'm going to infer that you'd consider yourself a defender of the free market: are you genuinely unaware of what happens to markets when someone attains monopoly power?posted by praemunire at 6:08 PM on March 1, 2018 [11 favorites]

Broadly, the US taxes corporations based on where they are incorporated. Ireland taxes corporations based on where they are managed and controlled. So, if you incorporate in Ireland but manage and control from California...voila! You're a company without a nation for tax purposes. Now you can funnel sales through that ghost subsidiary...that's how Apple could push 1/3 of its sales through an Irish subsidiary which paid no corporate income taxes for years on end.

We're going to have to rethink a lot of taxation jurisdiction stuff. In the 21st century taxes on profits won't do it anymore. We need an AMT for corporations on revenue, senior to all other creditors in bankruptcy btw, otherwise we're going to see a huge rise of "brand license fees" paid by larger companies to offshore corporations in low tax jurisdictions which are booked on the local company's balance sheet. Think distribution fees paid by movie production vehicles.

Hollywood has long made sure the profit can look zero to the people it needs to pay. The corporate world has been slightly more conservative because they're going up against the government not some pissant actor. But now with regulatory capture they're getting more brazen. Eddie Murphy called those points "monkey points" and sure enough, the government are getting played like monkeys on taxation.posted by Talez at 4:21 AM on March 2, 2018 [4 favorites]

"Why on earth would anyone other than the true believers that frequent Metafilter ever think it would be a good use of government power to break up a store that sells a staggering array of goods for very reasonable prices with remarkable speed and convenience?"

need an AMT for corporations on revenue, senior to all other creditors in bankruptcy btw

Just FYI, federal tax liabilities are senior to everything in bankruptcy already.posted by praemunire at 11:37 AM on March 2, 2018 [1 favorite]

The assumption for as long as I've been paying attention is that network effects make concentration inevitable in the online world. If you're not the biggest, then you'll end up as nothing.

one thing that the technological reordering of the world around bits rather than atoms does is move whole sections of formerly 'economic' -- with dollar signs attached to their transaction values (and hence also 'productive') -- activities and moves them into tech giants' datacenters. while perhaps more 'efficient' and reaping 'increasing returns' from 'economies of scale' -- at zero marginal cost! (winner-take-all network externalities and 'natural' monopolies, ahoy) -- and conferring consumer surplus (to those who still have jobs producing 'economic value added' activities), it is enormously 'disruptive' to those left behind. it is also not captured in GDP.

One of his most intriguing arguments compares the power of the US tech giants today and the motor industry in the 1950s. At that time, the big three US manufacturers, Ford, GM and Chrysler, were busily churning out flashy and popular cars and controlled 96 per cent of the US market between them. Then in 1965 a young lawyer named Ralph Nader wrote Unsafe at Any Speed, assailing the car manufacturers for turning out lethal products that prioritised style over safety and created carnage on the country’s roads.

Nader’s campaign jolted somnolent politicians into action. They soon mandated that all cars should carry standard safety features such as seat belts and forced some 86m dangerous cars to be recalled. As a result, the number of deaths per hundred million miles travelled on US roads fell from five in 1965 to one by 2014, a drop of 80 per cent. That shift also had one other striking impact: it changed the competitive dynamics of the industry. In particular, German carmakers, which had quickly redesigned their products with safety in mind, won over consumers and ate up market share.

Keen cites this episode as an analogy for our own times. For the moment, the public and politicians quail in front of dominant US technology companies such as Google, Apple, Facebook and Amazon, sometimes labelled the “private superpowers”. But could a similar shift in public opinion lead to a radical transformation of the digital economy and change the competitive landscape? Could Silicon Valley, so immersed in its own sense of technological impregnability and historical inevitability, go the same way as Detroit?

Keen, who is one of the most combative and acerbic commentators on Silicon Valley, certainly hopes so. He argues that the internet’s “surveillance-style advertising-based ecosystem” is not sustainable. That leaves the Big Data internet companies strangely ill-prepared for the future and ripe for disruption. And he finds the next generation of disrupters in an unlikely location: Europe, which is normally ridiculed by the West Coast titans for its lack of innovative dynamism.

First, he argues, European politicians still believe in their moral duty — and regulatory power — to shape markets. He describes Margrethe Vestager, the EU’s competition commissioner who has enthusiastically taken on the likes of Apple and Google, as a 21st-century reincarnation of the trust-busting Teddy Roosevelt. Keen suggests that the Danish politician’s cosy office in the Berlaymont Building in Brussels, where she famously dressed down Apple’s Tim Cook in a row over taxes, may well be the “most important place on the planet for determining the future of the global technology industry”.

Second, Europe’s determination to defend its citizens’ privacy, as exemplified by the General Data Protection Regulation that comes into force this May, will create a fresh competitive landscape encouraging the rise of a new generation of more scrupulous internet businesses...

Keen draws inspiration from elsewhere in Europe, most notably Estonia, which has developed one of the world’s most sophisticated national ID schemes. He interviews the country’s former president Toomas Hendrik Ilves, a jovial, bow-tied computer scientist now resident at Stanford University, who is credited with inspiring the Estonian digital model. He finds him a lot less fixated on privacy, though, and a lot more concerned with data integrity.

Ilves argues that the main function of a modern government in a digital society is to guarantee identity. If information is indeed the new currency of the networked age then it too requires a “sovereign guarantee”...

As its title suggests, How to Fix the Future claims to be a “solutions book”. Keen’s five tools for improving the future are regulation, competitive innovation, social responsibility, worker and consumer choice and education. By adopting better policies, he hopes that we can all return to the original vision of the internet as a decentralised and empowering repository of knowledge...

There have been several recent books making the moral case for a universal basic income, a regular payment made to every citizen regardless of wealth or circumstance, to help cushion people against technological shock. But Hughes argues a more practical case for a targeted guaranteed income for the most deprived in society. These payments could be made via the existing Earned Income Tax Credit scheme.

Hughes argues that $500 a month should be paid to every working adult in households making less than $50,000 a year. That would add $290bn to federal spending a year, about half the US defence budget. The simplest and most honest way to pay for that additional spending would be to tax the richest 1 per cent, or “people like me”, he writes.

He calculates that taxing investment income for those earning more than $250,000 at the same rate as wages would raise $80bn a year. Closing inheritance tax loopholes could bring in an additional $34bn. But the bulk of the money would come from raising taxes on income to the historical average for much of the 20th century: 50 per cent. That would raise $190bn a year...

One of the principal objections to a basic income is that it would reward the lazy and devalorise work. It would be “money for nothing”, in the words of the song. But as Andrea Komlosy argues in Work: The Last 1,000 Years, our conception of what constitutes work has changed markedly over time. The professor of social history at the University of Vienna writes that our commonly accepted definitions are too narrow, too European, too male and too modern.

The historical break in our understanding came in the 18th century as a result of the Industrial Revolution. “One hundred years earlier, a separation between productive and reproductive or paid and unpaid work, or between work for one’s own use and work for sale on the market, simply would not have made sense,” she writes.

Komlosy identifies three very different historical attitudes towards work. The first, common in ancient Greece, was that work was a burden that had to be overcome so that we could lead a contemplative life. The second, espoused later by the Jewish, Christian and Islamic faiths, was that work was not a cursed punishment but a blessing from God.

The third view, championed by the labour and women’s movements in the 19th century, was that work could be transformational, turning toilsome effort into creativity and social alienation into self-actualisation.

The advocates of a basic income sometimes argue that we need to reacquaint ourselves with the contemplative life of ancient Greece — only this time including more than just a small male elite. We have the wealth, knowledge and means to fix the future. But, first, we will need to redefine what we mean by human work in our robot world.

In particular, German carmakers, which had quickly redesigned their products with safety in mind, won over consumers and ate up market share.

This story about the auto industry that the article talks about doesn't mention anything about the Japanese auto industry and how it too grew rapidly during this period too (partly because of the 70s energy shock). And I guess on a similar note, I think the most likely Silicon Valley competitor will be China and not Europe (the article does mention China's tech industry though).posted by FJT at 8:59 AM on March 6, 2018

Also the German car that ate up market share was the Beetle, a death trap by any measure (including the same swing axle problem the Corvair had).posted by Mitheral at 5:01 AM on March 7, 2018

I think the most likely Silicon Valley competitor will be China and not Europe (the article does mention China's tech industry though).

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